Morning Report – Decent jobs report. Bonds get crushed. 3/6/15

Markets are lower this morning after a decent jobs report raised fears of a June rate hike. Bonds and MBS are down big.

  • Nonfarm payrolls + 295k (235k expected)
  • Unemployment rate 5.5%, down from 5.7% in Jan
  • Average hourly earnings + .1% MOM / +2.0% YOY
  • Labor force participation rate down to 62.8%.

The payroll number got the attention of the Street, however the drop in unemployment was due to a drop in the labor force. So far, we are not seeing job losses in the oil patch due to lower prices, however employment did fall due to the refinery strike going on. Average hourly earnings are still rising more or less at the rate of inflation, and came in at $24.78 an hour.

This jobs report is strong enough to make it more likely the Fed will start increasing rates in June, and people who were forecasting a 2016 rate hike are probably re-assessing that outlook. Hence the sharp sell-off in bonds.

End of an era: Apple is joining the Dow Jones Industrial average. Exiting is Ma Bell, who joined the index in 1939.

FHFA Chairman Mel Watt spoke at the Goldman Sachs Housing Finance Conference yesterday. Here are his prepared remarks. Main points, FHFA is going to sell non-performing loans to the public, progress continues on a single security for Fannie and Freddie loans. Eligibility for HARP will not be expanded.

Mark Cuban weighs in on technology companies and why he thinks there is a bubble that is worse than the 2000s.

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